No. 27, 1994 - Trade among the CEFTA Contries in the mid-1990s: How to Promote the Expansion of Intra-Regional Trade Flows in Central Europe (Special issue)

The basic idea of the Tradelinks project of the International Center of Economic Growth (ICEG) came to the fore at the Second Regional Conference of the ICEG Correspondent Institutes in Central Europe, in October 1992, at Zvánovice, Czech Republic. A session of that conference dealt with the issue of intra-regional cooperation in the field of commerce, finance, infrastructure, et al. It became quite obvious that our empirical knowledge about the transition in this sphere was rather limited, as was our capability to provide sound trade policy recommendations on how, and how much, to promote intra-regional trade flows. The Tradelinks project aimed at a deeper investigation into this matter in order to understand why the collapse of intra-regional trade flows had been so sharp and recovery so long-lasting, as well as to propose adequate policy measures and company initiatives for promoting the resurgence of mutual trade.

The Tradelinks project was a collaborative research effort of four Central and Eastern European research centres and the ICEG, the latter also being the sponsor of the project. In December 1992, the participating countries of the region signed the Central European Free Trade Agreement (CEFTA); thus in the present paper they will be referred to as CEFTA countries, although other notions/labels (e.g. Visegrád Group countries) also have been used quite frequently.

The present summary report of the Tradelinks project is based on the four country studies constituting the core part of the project. Although one of its major objectives is to present the basic assessments, evaluations, problems, explanations and proposals raised in the country reports, it also is intended to be used as an autonomous research paper which can be read and interpreted without the intimate knowledge of the particular details tackled within the country reports. Thus, the scope of the summary paper is designed to cover all those topics – elaborated upon in the country reports – which have been relevant to the major subject at hand. Further, in order to give a comprehensive picture on this central issue, numerous aspects are touched upon which were not covered in every (or any) one of the country studies. For the above reason, however, a couple of interesting aspects of the economic transformation in the Central European countries will be neglected hereinafter, although they were discussed at length and with substantial explanatory strength in some of the country reports.

The summary report is organized as follows. First, some statistical and methodological problems are examined, and the level and dynamics of intra-regional trade flows identified. In Chapter 3 the basic differences between the institutional framework of mutual trade flows in the late 1980s and that in the early 1990s are pointed out and their possible role in the decline of intra-regional trade discussed. Chapter 4 focuses on changes in the commodity pattern of mutual trade flows in the period under review. Chapter 5 summarises the results of the empirical surveys carried out in the four countries. The aim of the closing chapter is to enlist proposals and recommendations gained from the individual country studies. The major features and first impacts of the free trade agreement (CEFTA) – which so far has been the only major tool used for the promotion of mutual trade (since taking effect in March 1993) – also are discussed there.